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Freud issues bedroom tax reclassification warning

Lord David Freud has threatened to withdraw or restrict housing benefit subsidy to councils which ‘inappropriately’ reclassify properties for bedroom tax purposes.

The welfare reform minister, in a letter to council chief executives today, said there have been cases of councils redesignating properties without reducing their rent to reflect a loss of a bedroom. Lord Freud said he expects ‘the designation of a property to be consistent for both housing benefit and rent purposes’.

The letter said: ‘Blanket redesignations without a clear and justifiable reason and without reductions in rent, are inappropriate and do not fall within the spirit of the policy.

‘If it is shown properties are being redesignated inappropriately this will be viewed very seriously,’ the letter said.

Lord Freud said that where the Department for Work and Pensions suspects properties are being redesignated inappropriately, it will commission an independent audit to ‘ascertain whether correct and appropriate procedures have been followed.’ He said redesignating properties without reducing the rent would lead to incorrect housing benefit subsidy claims being submitted to the DWP.

The letter goes on to warn: ‘Where it is found that a local authority has redesignated properties without reasonable grounds and without reducing rents, my department would consider either restricting or not paying their housing benefit subsidy.’

The letter said the DWP has no objections to re-desigations where there are good reasons, such as where a property has been adapted to cater for a disabled person’s needs, but said the designation should be consistent for housing benefit and rent purposes.

Under the bedroom tax, social housing tenants of working age deemed to have spare rooms have their housing benefit cut by £14 a week on average. The policy is intended to save around £500 million a year.

The DWP has decided not to define a ‘bedroom’ for the purposes of the policy, saying instead that it is up to landlords to ‘accurately describe the property in line with the rent charged’. This has left open the possibility of landlords reclassifying properties as having fewer bedrooms to enable tenants to avoid the penalty.

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